Second Appeal No.266 of 2012

23rd December, 2013

Petitioner Counsel: Mr. V.K. PALIWAL
Respondent Counsel: Mr. M.L. VAIRAGADE, Mr. H.D. DUBEY

JUDGMENT

JUDGMENT :- This appeal is preferred against the concurrent judgments and decrees passed by both the Courts below. The appellant had filed a suit bearing Regular Civil Suit No.83 of 2005 for declaration and mandatory injunction against the respondents claiming that they had no authority in law to direct deduction of an amount of Rs.1,81,691/- out of the total amount Rs.2,14,088/-, being payable to the appellant as his retirement gratuity, upon his retirement from his service as Section Officer with Zilla Parishad, Washim. He submitted that only ground on which said direction issued on behalf of the respondent No.1 could have been justified was when the said amount was considered as a Government due under the provisions of Rule 132 read with Rule 134 of the Maharashtra Civil Service (Pension) Rules, 1982 (hereinafter referred to as "the Pension Rules"). Appellant submitted that there was no Government due found to be recoverable from him at the time of his retirement and, therefore, respondent Nos.1 and 2 lacked authority in law to direct payment of retirement gratuity by deducting an amount of Rs.1,81,691/-, alleged to be the loan taken by the appellant from the Employees Co-operative Credit Society and not re-paid by him.

2. The suit was resisted by the respondent Nos.1 and 2, who filed their common written statement while respondent No.3 did not file any written statement. These respondents submitted that the appellant had borrowed some amount as loan from the Employees Co-operative Credit Society and at that time he had executed a "Hamipatra" or an undertaking for re-payment of loan on the basis of which the loan was sanctioned. These respondents further submitted that the respondent No.2 had given no objection to the Society in sanctioning of loan to the appellant and had also assured the Employees Co-operative Credit Society that the loan would be re-paid. Therefore, when it was found by these respondents that the loan was not actually re-paid and the appellant had even pressurized his subordinates, he being the Section Officer, not to remit loan installments to the Employees Co-operative Credit Society, the respondent No.1, as head of the Department, passed an order for deducting said amount from the retirement gratuity payable to the appellant, for its being sent to Society towards re-payment of its loan.

3. The suit, upon consideration of the evidence on record, was dismissed by the learned Civil Judge, Senior Division, Washim by his judgment and decree passed on 12th January, 2009. The first appeal that was preferred against the said judgment and decree by the present appellant, being Regular Civil Appeal No.23 of 2009, was also dismissed by the learned District Judge-1, Washim by his judgment and order passed on 10th February, 2012. Not satisfied, the appellant is now before this Court by way of the present second appeal.

4. Having regard to the rival submissions, only substantial question of law which arises for my consideration in this appeal and which has been formulated by this Court on 28th January, 2013, is as under :-

"Whether the respondents are competent to deduct an amount of loan said to be outstanding against the appellant in respect of loan said to have been obtained from Employees Credit Coopertive Society from the amount of pension due and payable to the appellant ?"

5. Before proceeding to deal with the substantial question of law in the light of the arguments advanced by both sides, it would be appropriate to make clarification about the meaning of the term 'pension amount' used in the plaint and also in the prayer clause (b) of the plaint. The appellant/plaintiff has sought a declaration that the order passed on behalf of respondent No.1 on 2nd March, 2005, directing deduction of sum of Rs.1,81,691/- from the total amount of Rs.2,14,088/- payable upon retirement on superannuation to the appellant is illegal. This amount of Rs. 2,14,088/- has been stated in the said order to be an amount payable to the appellant on account of certain head, described in Marathi as "e'R;qlsok minku". In Marathi into English dictionary published under the title ''kklu O;ogkj 'kCnkoyh' (Government Business Dictionary) by Directorate of languages, Government of Maharashtra, Bombay in August 2005, the words "e'R;qlsok minku" are not referred together for translation. The word "minku" finds mention at Page No.68 and the words "e'R;qlsok minku" appear at page No.369. They have been shown to carry meanings in English respectively as "gratuity" and "death-gratuity". Since, there is no question of "death-gratuity" in the instant case, the term "e'R;qlsok minku" would have to be understood as meaning "retirement gratuity" and not the 'pension amount' as has been mentioned in the plaint and the prayer clause. Therefore, for the purposes of this appeal, the amount of Rs.2,14,088/- payable to the appellant upon his retirement on superannuation would be considered and referred to as the amount of "retirement gratuity" and term 'pension amount' used in this matter would be taken to be referring to "retirement gratuity".

6. Mr.V.K.Paliwal, learned counsel for the appellant has forcefully argued that respondent Nos. 1 and 2 do not have any authority under the law to issue a direction about the deduction of any amount of loan obtained by an employee from some Co-operative Credit Society from the retirement dues or gratuity payable to an employee, treating such loan amount as a government due. He submits that the loan obtained from a society does not fall within the scope and ambit of Rules 132 and 134 of the Pension Rules. Therefore, he submits, entire action of the respondent Nos.1 and 2 in this case against the appellant is illegal and both the Courts below have committed serious error in law in not decreeing the reliefs prayed for by the appellant.

7. Mr.M.L.Vairagade, learned counsel for the respondent Nos.1 and 2 has strongly contested the contentions so raised on behalf of the appellant. He submits that the expression "any other advance" used in sub-rule 3(b) of Rule 132 of the Pension Rules is sufficiently wide to take within its fold the loan amount due and payable to Employees Co-operative Credit Society by a government employee and, therefore, it cannot be said that the direction issued by the respondent No.1 on 2nd March, 2005 is illegal. He also submits that "Bandhapatra" (Exhibit-55) executed by the appellant in favour of respondent Nos.1 and 2 would show that the appellant had authorized respondent Nos.1 and 2 to make deductions from his retirement dues, if those deductions were found to be necessary for satisfaction of his liabilities including liability towards a credit Society. Thus, according to him, on both these counts the findings recorded by both the Courts below can be justified and so this appeal deserves to be dismissed. Learned A.G.P. for respondent No.3 has adapted his argument.

8. Upon perusal of the judgments of both the Courts below and also the evidence brought on record by both sides with the assistance of learned counsel for the appellant, and learned counsel for the respondent Nos.1 and 2 and also learned A.G.P. for the respondent No.3/State, I do not think that any legal justification is there for both the Courts below to refuse the reliefs sought for by the appellant against the respondents.

9. From the defence taken by the respondent Nos.1 and 2, it is seen that the order dated 2nd March, 2005 has been sought to be justified by these respondents by putting forward a ground that at the time when loan was sanctioned by the Employees Co-operative Credit Society, respondent No. 1/defendant No.1 was the head of the Department for the appellant and in that capacity, he had assured the society that there would be re-payment of loan amount and in order to fulfill this assurance that the respondent No.1 had passed an order directing recovery of loan amount from the retirement dues payable to the appellant. The written statement does not take a plea in specific manner that the respondent Nos.1 and 2 were competent to deduct the loan amount under the provisions of Rules 132 and 134 of the Pension Rules. It appears that it was only at a later stage, particularly at the stage of argument, that the resort to these Rules was made by the respondent Nos.1 and 2 in order to justify their action of directing deduction of the aforesaid amount from the retirement gratuity of the appellant. So, before turning to the Rules, it would have to be examined what evidence was adduced by the respondent Nos.1 and 2 to support the contention that there was an assurance given to the Credit Society as regards re-payment of loan by the appellant.

10. Upon a careful examination of the evidence brought on record, one can very well see that there is not even an iota of evidence produced before the trial Court by the respondent Nos.1 and 2 to establish the contention that these respondents had given assurance to Society for re-payment of loan. No evidence has been produced to show that Mr.XYZ was the concerned officer at the relevant time and he had given such an assurance. There is no documentary evidence adduced either by the respondents in this regard. Therefore, so far as the contention that there was an assurance given by the respondent No.2 as regards re-payment of loan is concerned, one has to say that it has not been proved by the respondents.

11. About the competency of respondent Nos.1 and 2 to direct deduction of the loan amount from the retirement gratuity payable to the appellant, I find that there is no Rule under the Pension Rules authorizing the respondents to issue the direction impugned herein. Rules 132 and 134 refer to recovery and adjustment of Government dues and not to the dues of any Credit Society or Bank or the financial institutions. Rule 132 is extremely relevant in this regard and it is reproduced as under :-

"132. Recovery and adjustment of Government dues.

(1) It shall be the duty of the Head of Office to ascertain and asses Government dues, payable by a Government servant due for retirement.

(2) The Government dues as ascertained and assessed by the Head of office which remain outstanding till the date of retirement of the Government servant, shall be adjusted against the amount of the [retirement gratuity] becoming payable.

(3) The expression 'Government dues' include-

(a) dues pertaining to Government accommodation including arrears of license fee, if any;

(b) dues other than those pertaining to Government accommodation, namely balance of house building or conveyance or any other advance, overpayment of pay and allowances or leave salary and arrears of income-tax deduction at source under the Income Tax Act, 1961 (43 of 1961)."

12. Upon overall reading of Rule 132, the only conclusion that can be drawn is that it authorizes the Head of Office to adjust the amount found to be due and payable by a retiring Government servant to the Government at the time of his retirement against the amount of retirement gratuity becoming payable to him. The expression "Government dues" has been defined in sub-section 3 in an inclusive manner. All the clauses thereunder refer to the liabilities incurred by the retiring Government servant towards the Government or the employer. No doubt, there is use of an expression "any other advance" in sub-rule 3(b). But, this expression cannot be read and construed to mean an advance obtained by a Government servant from any institution or agency other than the Government. The reason being that the Pension Rules define the rights and liabilities between the Government and the Government servant and so are applicable only as between the Government and the Government servant. These Rules have a force of law and create a binding jural relationship between the Government and its servant. These Rules only contemplate rights and duties of the Government qua the servant and vice versa and therefore unless it is expressed in specific words in the Rules, it cannot be said that the Rules also create rights in favour of persons to whom they are not applicable and impose consequent duties upon the Government towards such outsiders. In the entire Rule 132, it is nowhere stated expressly that the Head of the Office is also authorized to deduct from the retirement gratuity, an advance taken by the retiring servant from any outside agency and which is due and payable to that agency by the Government servant. Therefore, I find no substance in the argument of learned counsel for respondent Nos.1 and 2 that the term "any other advance" in sub-rule 3(b) would cover the loan taken from a credit Society by a Government servant.

13. A reference to Rule 134 has been made by the learned counsel for the respondent Nos.1 and 2 to support his argument that it also authorises the Head of Office to deduct from retirement dues the advances taken by the Government servant from the credit Society. Insofar as this provision is concerned, suffice it to say that since it lays down a procedure for adjustment and recovery of dues of the kinds mentioned in Rule 3(b) of Rule 132, barring the dues pertaining to Government accommodation, it must receive the same construction as has been given to Section 132 earlier.

14. Learned counsel for the respondent Nos.1 and 2 has invited my attention to a duty imposed upon the employer under Section 49(2) of the Maharashtra Co-operative Societies Act, 1960. He submits that under this Section, when the employer receives a copy of the agreement executed by a member of the Society agreeing that his employer would be competent to deduct from his salary or wages, the amount of loan due from him to the Society, the employer would be perfectly within the limits of law to issue a direction regarding deduction of loan amount from the retirement gratuity.

15. Section 49 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as "the Societies Act") without any doubt imposes a duty upon the employer to deduct the loan amount from the salary or wages of the employee and remit the same to the Society and keep on remitting the same as long as total loan amount stands repaid. This duty in the employer is created under sub-section (2) when he receives a copy of the agreement and written requisition of the society as contemplated under sub-sections (1) and (2) of Section 49. Sub-section (1) states that the member of the Society may execute an agreement in favour of the Society to the effect that his employer shall be competent to deduct from the salary or wages payable to him by the employer, such total amount payable to the Society and in such installments as may be specified in the agreement. The duty so created in the employer upon fulfillment of the conditions of sub-sections (1) and (2) is mandatory, which can be seen from the imperative nature of the language of sub-section (2), the penal consequences provided in sub-section (3) for failure to perform the duty and object for which the Societies Act has been enacted by the Legislature. At this juncture, it would be useful to reproduce relevant portion of Section 49. It reads :

"49. Deduction from salary to meet Society's claim in certain cases

(1) A member of a society may execute an agreement in favour of the society, providing that his employer shall be competent to deduct from the or wages payable to him by the employer, such total amount payable to the society and in such instalments as may be specified in the agreement and to pay to the society the amounts so deducted in satisfaction of any debt or other demand of the society against the member. A copy of such agreement duly attested by an officer of the society shall be forwarded by the society to the employer.

(2) On receipt of a copy of such agreement, the employer shall, if so required by the society by a requisition in writing, and so long as the total amount shown in the copy of the agreement as payable to the society has been deducted and paid to the society, make the deduction in accordance with the agreement and pay the amount so deducted to the society, as if it were a part of the wages payable by him as required under the Payment of Wages Act, 1936 on the day on which he makes payment.

(3) If after the receipt of a requisition made under the foregoing sub-section, the employer at any time fails to deduct the amount specified in the requisition from the salary or wages payable to the member concerned, or makes default in remitting the amount deducted to the society, the employer shall be personally liable for the payment of such amount or where the employer has made deductions but the amount so deducted is not remitted to the society, then such amount together with interest thereon at one and half times the rate of interest charged by the society to the member for the period commencing on the date on which the amount was due to be paid to the society and ending on the date of actually remitting it to the society; and such amount together with the interest thereon, if any, shall, on a certificate issued by the Registrar, be recoverable from him as an arrear of land revenue, and the amount and interest so due shall rank in priority in respect of such liability of the employer as wages in arrears.

(4) ................"

Language of sub-section (2) is clear and leaves no doubt about mandatory nature of employers duty. Once the employer receives copy of the argument, and when the society requires him to deduct and remit to it the amount specified in the agreement, the employer is left with no choice but to deduct and pay the amount deducted to the society. That is why the word 'shall' has been used instead of the word 'may' and the deducted amount to be paid to the society has been treated to be just like the wages payable under the Payment of Wages Act, 1936. Sub-section (3) prescribes penal consequences for failure to perform the duty under sub-section (2) by imposing personal responsibility upon the employer. The duty so created, if performed well, will only contribute ultimately towards orderly growth and development of co-operative movement in the State of Maharashtra in accordance with relevant directive principles of State policy enunciated in the Constitution of India, the object of the Societies Act. If the duty as imposed by sub-section (2) upon the employer is not held to be of mandatory nature, it may not go well with the effort of the State in achieving the object of the Act and may create hurdles in the development of co-operative sector in the State. Thus, having considered all these aspects, the only conclusion that can be made about the nature of duty under sub-section (2) is that it is mandatory and leaves the employer with no option but to perform it, once the conditions set out in sub-sections (1) and (2) are fulfilled.

16. But, the question is whether or not any occasion arose in this case for the employer or the government to perform the duty as required by sub-section (2) of Section 49 of the Societies Act. The answer is a firm no as no evidence has been adduced by the respondent Nos.1 and 2 about receipt by them of the copy of the agreement and requisition as contemplated under sub-sections (1) and (2). In fact, there is no specific pleading made by the respondent Nos.1 and 2 in this regard and all that they have set up as a defence is that the respondent No.2 had made an assurance to the credit society that the loan amount would be re-paid. I have already held that as regards this assurance, there is no evidence available on record. Therefore, no substance can be found in the argument canvassed on behalf of respondent Nos.1 and 2 about the authority given under Section 49 of Societies Act to respondent Nos.1 and 2 by the appellant for making of deduction of the loan amount.

17. Learned counsel for the respondent Nos.1 and 2 has also referred to one 'Bandhapatra' (Exhibit-55), in order to support his argument that respondent Nos.1 and 2 did have authority to make deductions. Again, I find no substance in such an argument for two reasons. Firstly, this document has not been duly proved by the respondents. There is only one witness examined by the respondent No.1 and 2 on their behalf and he is DW 1, Vasant Pandurang Patil (Exhibit-50). His evidence does not show any reference having been made to this document by him. Secondly, there is also no pleading in the written statement as regards the authority allegedly given by the appellant to the respondent Nos.1 and 2 for making of deductions as per said Bandhapatra. So, without any pleading and without any evidence, it cannot be said that the respondent Nos.1 and 2 were authorized to make deductions of the alleged loan amount from the retirement gratuity. Even otherwise, presuming, just for the sake of argument, that this 'Bandhapatra' or an undertaking has been duly proved by the respondent Nos.1 and 2, still, one finds that it does not take the case of respondents anywhere. From its contents what emerges is that the authority for deduction and payment has been given only in respect of the Government dues and nothing more. So, even from the contents of this document (Exhibit-55), the claim of respondent Nos.1 and 2 that they had the authority to deduct the loan amount from the retirement gratuity and remit the same to the society stands demolished.

18. The trial Court, as seen from its impugned judgment and decree, appears to have made some presumption not permissible under the law. It has presumed that since it is proved that appellant, a Government employee, had been sanctioned loan by the co-operative credit Society and had also availed of it, he must have given authority under Section 49 of the Societies Act to the employer to deduct loan amount from the salary payable to him. This presumption is upon the premise that without such authority, no co-operative credit Society would sanction the loan. This may be a general rule. But, I am afraid, such a presumption cannot be drawn when there is no legal or factual basis. There have been cases when Societies have sanctioned loans by making exceptions to general rule. Therefore, it cannot be said that on the basis of sanction of loan by a society, giving of authority under Section 49 of the Societies Act can be presumed as a matter of common course of events, human conduct and private business, within the meaning of Section 114 of the Indian Evidence Act, 1872. Then, what is contemplated as authority to make deduction under Section 49 is not oral but written, in the nature of a specific agreement providing that the employer shall be competent to deduct specified amount from the employees salary or wages and pay the same to the society. Therefore, unless the agreement is produced in evidence, no presumption about it's due execution can be drawn. So, the trial Court committed a serious error of law and fact in this regard.

19. Upon such an erroneous presumption, the trial Court further held that since the loan was obtained by the appellant from the credit society during his service tenure and has not been re-paid by him before his retirement, his case would fall within the ambit of Rule 134-A of the Pension Rules. No doubt Rule 134-A and particularly its sub-rule (ii) authorizes the Government to recover from the amount of pension sanctioned to him such amount as is found to be obtained by the pensioner during his service tenure and is recoverable from him. This reasoning of the trial Court has been confirmed by the first appellate Court, but without considering the applicability of Rule 134-A to the facts of the present case. Both these Courts have mis-directed themselves in applying the provisions of Rule 134-A to the facts of the instant case. As already stated, the provisions of Rules 132 and 134 only govern the rights and duties created between the Government and the Government servants and have no application to the rights of another person or agency independently created under a specific agreement between him or it and the Government servant, unless that agreement is also expressly covered under these Rules. These Rules do not cover any agreement independently entered into between the Government servant and the other institution or agency. Similar being the position of Rule 134-A, it cannot be given any different construction. Therefore, the reasons given by both the Courts below in rejecting the reliefs to the appellant are mis-conceived and contrary to the legal provisions.

20. Thus, I find that the impugned order dated 2.3.2005 directing the deduction of the amount of Rs.1,81,691/- from the retirement gratuity payable to the appellant was without any authority of law and could not have been issued by the respondent Nos.1 and 2. Consequently, I hold that the appellant has made out his case for issuance of the declaration and injunction as sought for by him. The substantial question of law is answered accordingly and the appeal deserves to be allowed.

21. The appeal is allowed with costs throughout.

22. The judgments and decrees of both the Courts below are hereby quashed and set aside.

23. The suit of the appellant is decreed.

24. It is hereby declared that the direction issued in the order dated 2.3.2005 regarding deduction of amount of Rs.181,691/- from the retirement gratuity is illegal and the respondents are permanently restrained from recovering the amount of Rs.1,81,691/- from the retirement gratuity payable to the appellant, except in accordance with law.

25. If any amount is deposited by the appellant in the trial Court, same shall be refunded to him and, in case, it is kept in a term deposit account, it be refunded with interest accrued thereon within four weeks from the date of order.

Appeal allowed.